If Land originally cost $100,000 and it was written up to $150,000 due to soaring land values, would you Debit land and Credit Extraordinary Gains for the difference?
by 
orange nation
ANSWERS: 1
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Yes that is one method of accounting. Going by the conservative system of accounting I would rather create a separate Reserve for accounting the notional income or Loss for such market fluctuation on Fixed Assets and adjust the P/L only when the Asset is sold. Land Account Dr. $50,000 to Price equalisation Reserve Cr. $50,000 When the Land is sold for $150,000 Cash Dr. $150,000 to Land Account Cr. $150,000 Price equalisation Reserve Dr. $ 50,000 to Profit on Sale of Assets Cr. $ 50,000 I have not considered the entries for Depreciation if any provided.
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